Ubisoft’s Share Price Takes A Tumble Despite Growing Video Games Sector

Ubisoft’s Share Price Takes A Tumble Despite Growing Video Games Sector

Investors have been keenly keeping an eye on, and many investing in, the booming video gaming sector over the past couple of years. The rise of mobile gaming, eSports and a customer base that now spans demographics has seen the industry achieve sustained double-digit growth rates for close to a decade now. And as gaming technology and business models evolve double-digit growth is expected to continue for at least the next decade.

But that doesn’t mean there won’t be bumps in the road as investors in French games publisher Ubisoft have found out with the company’s share price plunging 13% today. The fall comes despite the company publishing a solid set of annual results and ‘net bookings’ rise 17%. Net bookings is the favoured industry sales metric and includes products and services sold digitally or physically as well as licensing fees, merchandise, in-game advertising, strategy guides and publisher incentives.

However, the market reacted badly to the announcement that Ubisoft’s highly anticipated new blockbuster pirate-themed game Skull & Bones is to again see its release date delayed. Originally due to be published last year and put back to this year, Skull & Bones will now not be released until sometime, as yet unconfirmed, after March 2020.

Ubisoft has built its name, and share price on the Prince of Persia and Assassins Creed franchises as well as games series such as Far Cry and Beyond Good and Evil. But investors have been betting on the new game to reinvigorate revenues. The games publishing industry is one that is cyclical with revenues peaking when popular new titles are released and large investments in developing new games a drain between launches.

It would appear the company reached the conclusion that releasing the game now could have led to a flop with producer Karl Luhe stating via a video published on Twitter that “quality remains our number one focus”. Ubisoft has instead taken the decision to “batten down the hatches” and postpone.

Despite today’s share price plunge, Ubisoft’s record over the past decade has been a hugely successful one, mirroring the trajectory of the wider industry. In 2011 shares in the company traded at around 4 euros. Before today’s drop to around 72.50 euros they were at 83.2 euros and peaked last July at almost 103 euros.

Investors probably won’t be overly concerned about today’s share price drop with the company’s longer term prospects looking solid. The publisher looks set to be one of the first major partners of Google’s new Stadia games streaming service that will launch later this year after beta testing featured its Assassins Creed Odyssey game in a browser-based format. The company stated with its results report that it believes new gaming streaming platforms will allow it to reach over 5 billion players over the next decade.

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